Report: the Poor are Getting Richer

Market researchers say poverty in Israel is decreasing, and have stats to prove it. They also have some advice for policy-makers.

By Hillel Fendel

First Publish: 10/14/2010, 7:00 PM / Last Update: 10/14/2010, 7:22 PM

Despite annual poverty reports that paint a grim picture of economic gaps in Israel, the Jerusalem Institute for Market Research (JIMR) says that the number of those defined as “poor” has dropped nearly 20% in four years.

The Institute’s annual “Report on Israel’s Poor,” the most recent edition of which was publicized today, Oct. 14, states that the percentage of Israelis described as poor was 18.1% in 2004, and that that number dropped to 14.7% four years later. Even among the hareidi-religious and Arab sectors, generally considered to be the most worst-off financially in Israel, the numbers have dropped.

The discrepancy between the more well-known figures and those of the Jerusalem Institute stems from the different approaches in measuring poverty. The National Insurance Institute (NII) does so in a relative manner, relegating all those who earn less than a certain percentage of the national average to the category of “poor.”

JIMR, however, measures poverty by an absolute scale of income. Accordingly, 9% of Israel’s population, or 38% of those considered “poor” by NII standards, would not have been categorized as such in 1997.

Another way of looking at it is this: According to the NII, the realistic available income per capita in the lower 20% of the population was 8.2% higher in 2008 than it was in 2002. This means that poor families now earn 8.2% more than they did in 2002, and that families that were considered middle-class in 2002 would today be considered poor.

Purchasing Basic Staples
Another method based on the purchasing power of vital staples shows that poverty in Israel dropped from 28.3% to 21.8% between 2003 and 2008. This means that the number of families that could not purchase basic staples in terms of food, housing, education, transportation and the like dropped some 23% over this period.

In other words, the Institute says, some 450,000 people have joined, over this period, the ranks of those who earn more than the cost of basic needs.

JIMR economist Yarden Gazit notes another series of statistics to prove his thesis that Israel’s poor are better off than before: The number of lowest-tenth households with cellular phones is up from some 50% in 2001 to just over 80% in 2008; the statistic for internet connections is up from 2.5% to 27.6%; and the ownership of personal computers went from 23.3% to nearly 50%. Ownership of other appliances, such as washing machines, microwave ovens, DVD players, and air conditioners, among those earning 10% or less of the national average has also risen significantly.

Even more noteworthy, Gazit says, is the fact that 12.5% more poor families own an apartment now than did several years ago – despite the rise in housing prices.

Noting that life expectancy among both Jews and Arabs has risen – to an average of 80.7 years for Arab women, 76.3 for Arab men, 83.9 among Jewish women, and 80.5 among Jewish men – the JIMR report states that all the stats indicate a rise in standard of living among the poor in Israel.

Concentrate on the Facts, Not the Gaps
“Instead of concentrating on relative poverty and the gaps between the rich and poor,” the JIMR researchers state, “the policy makers must focus on the data regarding the changes in the realistic situation of the poor, in terms of income, access to public services, ownership of appliances, health and the like, in order to identify those who are truly poor.”